Global Oil Prices Surge $10 Amid Israel-Iran Conflict, Raising Economic Alarm
Global oil prices rose sharply following missile and drone exchanges between Israel and Iran, shaking energy markets and fueling fears of renewed economic strain worldwide.
Brent crude climbed to $78 per barrel last Friday before easing slightly to $74.50. That still marks a $10 increase over the past month, driven by concerns that the ongoing conflict could disrupt oil supply routes.
The surge came after Israel launched strikes inside Iranian territory, prompting retaliation. The military confrontation has not yet spilled over into direct disruptions of global energy routes, but markets remain on edge.
Experts say the Strait of Hormuz remains the most sensitive pressure point. Roughly 20% of the world’s oil moves through this narrow waterway near southern Iran. Any threat to shipping in the area could cause prices to spike further.
“It’s a narrow choke point. That risk alone is helping push up prices,” said Richard Bronze from Energy Aspects. He warned that while direct interference remains unlikely, the possibility has grown since last week.
Impact on Households
The jump in oil prices is already affecting consumer expectations. A $10 rise in crude oil typically adds around 7 cents per gallon to gasoline prices, according to current estimates.
David Oxley, a senior analyst, explained that if prices stay elevated, the ripple effects could reach every sector. “Higher energy costs don’t just hit drivers. They raise costs across farming, transport, and manufacturing.”
Gas prices, also influenced by the conflict, have moved upward but remain buffered in the short term due to regulated pricing and delayed cost pass-through mechanisms in many countries.
Comparisons to Past Crises
Though significant, the current price hike is still below levels seen during the 2022 energy crisis, when Russia’s invasion of Ukraine drove crude prices near $130 per barrel.
Back then, economies were reopening after pandemic lockdowns, fueling high demand. Today, global demand is more subdued due to slowing growth in major economies.
This has helped keep prices from climbing further for now. Countries like Saudi Arabia and Brazil still have the capacity to increase production if needed, which could help stabilize the market.
Looking Ahead
The broader economic outlook hinges on how long the Israel-Iran conflict lasts and whether it draws in other nations. Tensions have added to instability in a global economy already strained by inflation, supply chain issues, and geopolitical uncertainty.
Mohammed El-Erian warned that continued escalation could “deliver another blow to an already fragile global order.”
Capital Economics estimates that if oil breaches $100 per barrel again, inflation in advanced economies could rise by 1%, complicating efforts to cut interest rates.
Still, some analysts remain cautiously optimistic. “Instability in the Middle East is not new,” Oxley said. “In a week’s time, the market may calm if no further disruption occurs.”
So far, the situation remains fluid. For consumers and businesses alike, the coming days will be key in determining whether the latest energy shock is a passing jolt or a prolonged crisis.
